Seventh Adams Produce official faces criminal fraud charges

A federal grand jury in Alabama has indicted the former chief operating officer of bankrupt Adams Produce Co. in relation to fraud, marking the seventh criminal case to be filed against former officials of the Birmingham fruit and vegetable distributor.

Steven Finberg faces 33 criminal counts in connection to a scheme to defraud the federal government of hundreds of thousands of dollars with false invoices and purchase orders for fresh produce destined for public schools and the military.

Finberg is scheduled to appear for arraignment June 12 in the U.S. District Court in Birmingham. As of May 30 he was not in custody, according to a spokeswoman for the Assistant U.S. Attorney’s office.

The May 27 indictment of Finberg came less than a month after a federal grand jury indicted the company’s former chief financial officer John Alexander on similar charges. Alexander is free on bond

Five other former Adams Produce officials have negotiated plea agreements and admitted guilt in relation to the fraud scheme in 2011.

Scott Grinstead, former CEO of Adams Produce, was not charged with fraud but was charged with, and pleaded guilty to, knowing about the scheme and not reporting it. Grinstead and the other four former Adams officials, who pleaded guilty to fraud, have been sentenced — Grinstead and three others received prison time.

Federal judges ordered four of the former officials to jointly repay $481,000 to the government. Grinstead was ordered to pay restitution to the bankruptcy estate of Adams Produce to help pay back wages to the company’s employees. Workers were caught off guard when Adams suddenly closed its doors and filed for bankruptcy in 2012.

The other former company officials who pleaded guilty are purchasing director David Kirkland, distribution center general manager Michael O’Brien, purchasing agent Stanley Butler and purchasing program specialist Christopher Pfahl. The group admitted to defrauding the government through transactions with the Defense Supply Center Philadelphia, according to a news release from the assistant U.S. Attorney’s office in Birmingham.

“The supply center contracted with Adams Produce to provide fresh fruits and vegetables to military bases, public school systems, junior colleges and universities,” according to the release.

“Adams Produce entered into contracts with the government worth millions of dollars, according to court records. The price paid by the government depended, in large part, on the cost to Adams Produce to purchase fruits and vegetables. … Finberg engaged in a scheme to create false records that reflected an inflated cost to Adams Produce for fruits and vegetables it purchased from a national distributor.”

Finberg met with the other officers and employees of Adams Produce in July 2011 to discuss ways to increase the company’s profit margins on government contracts, including conducting transactions designed to create fraudulent purchase orders, according to the release.

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About the Author:

Coral Beach, Staff Writer

Coral Beach joined The Packer newsroom in February 2011, bringing more than 30 years of experience at daily newspapers, trade magazines and online publications. Beach earned a bachelor’s of science degree from the University of Kansas School of Journalism in 1982.
e-mail: cbeach@thepacker.com
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